Kenya has repaid the balance of $560 million (Sh. 72 billion) for the 2014 Eurobond debt that was due for maturity this June. This Eurobond debt balance was settled on Friday, June 21, 2024. This repayment was revealed by the Central Bank of Kenya Governor Kamau Thugge.

“From the balance of $500 million that is falling due on Monday, we are going to make the payment today and we have the resources to be able to make the payment for Monday and that will be the end of the episode for that Eurobond,” Thugge told a local media house.

Earlier on, Thugge had announced that the government would use funds from a newly acquired loan from World Bank to settle the pending Eurobond debt balance.

This means that the funds used to settle the balance have been drawn from the Sh. 156 billion the government has freshly received from the World Bank.

Kenya first made a partial payment of this debt in February this year. The National Treasury announced in a notice that it had bought back $1.44 billion out of the outstanding $2 billion of its 2014 Eurobond, opting to utilize the entire amount it raised from a new bond that was issued in early February to partially retire the older paper.

The new bond, whose sale concluded on February 13, raised a gross amount of $1.5 billion, which netted at $1.46 billion after payment of lead arranger fees.

The National Treasury had said in a notice on the outcome of the buyback exercise that bondholders had offered to sell a total of $1.48 billion. The buy back was confirmed by President William Ruto who was under pressure to reassure investors that Kenya would not default on the debt.

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“The successful execution of both the buyback and the new bond demonstrates strong investor confidence in Kenya through the international capital markets and a vote of confidence in the government’s overall debt management strategy,” said Ruto.

This partial repayment was largely attributed as one of the reasons behind the strengthening of the Kenya Shilling from lows of 162 to the current levels of around 131 to the greenback.

Apart from settling the outstanding debt, the loan from the World Bank is now expected to shore up the shilling in the forex exchange market. The World Bank loan was approved last week to help the country address short-term fiscal pressures and accelerate green initiatives.

The new loan from World Bank dubbed under the Kenya Fiscal Sustainability and Resilient Growth Development Policy Operation (DPO) is the first in a series of three. A Development Policy Operation (DPO) is a financial instrument used by the World Bank to provide budget support to countries for policy and institutional reforms.

“For Kenya to return to moderate risk of debt distress, the government will need to maintain the fiscal consolidation path, promote export growth, enhance the country’s policy and institutional assessment to increase its debt carrying capacity and proactively manage liabilities by focusing on concessional financing to reduce interest costs and repayment pressures,” Naomi Mathenge, World Bank Senior Economist for Kenya, said after the loan was approved.